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Bonds News

EMERGING MARKETS-Latam FX slides as dollar rises, Brazil real lags peers for the week

    * Brazilian real set for weekly losses of 3%
    * Dollar gains for the first time in four days 
    * Chilean peso outperforms Latam peers for the week

 (Updates prices throughout)
    By Shreyashi Sanyal
    Jan 22 (Reuters) - Most Latin American currencies fell on
Friday after the dollar ended a three-day losing streak, with
Brazil's real leading weekly losses among regional peers as
worries grew about the state of the country's public finances
and fiscal reforms.   
    The real led declines on the day, falling more
than 2% as a lack of clarity about Brazil's state finances and
slowing progress of fiscal reforms overshadowed what investors
saw as a hawkish move - the central bank removing its "forward
guidance" to keep interest rates low.  
    Analysts believe record-low interest rates should help speed
up Brazil's economic recovery, but against the backdrop of
rising coronavirus infections and a slower-than-expected pace of
vaccinations, the real remains susceptible to corrections.  
    The currency is set to log a weekly drop of 3.2%, the most
among other Latin American units. 
    Most emerging market currencies were weaker on Friday
against a dollar which rose for the first time in four days as
bleak economic data weighed on risk sentiment. 
    A preliminary survey showed Brazilian industrial confidence
fell in January for the first time in nine months, tying in with
other recent data that suggest the country's economic recovery
is losing steam.
    Mexico's peso shed 0.9%, with data showing consumer
prices rose in the year through the first half of January,
beating expectations. The currency is set to lose 0.6% this
week.
    "The key point is that inflation remains muted which should
pave the way for the central bank to resume its easing cycle,"
said Nikhil Sanghani, Latin America economist at Capital
Economics. 
    "With concerns about inflation set to ease and the economy
struggling due to a second wave of COVID-19 cases, we expect one
final 25bp rate cut in this cycle at Banxico's next meeting in
February, taking the policy rate to 4.00%."  
    The Chilean peso fell 1.4%, but was on track to end
the week with gains of 1.7%, benefiting from a steady rise in
prices of copper, its biggest export.
    Colombia's peso fell 1.3% and was on track to record
weekly declines of 1.6% as oil prices retreated further from 11
month highs. 
    Stocks in the region were lower, with Sao Paulo equities
 falling the most. 
    Brazilian reinsurer IRB Brasil RE plunged more
than 7% after it said it recorded a net loss of 124.5 million
reais ($22.93 million) in the penultimate month of 2020.

    
    Key Latin American stock indexes and currencies at 1917 GMT:
    
          Stock indexes                   Latest   Daily %
                                                   change
 MSCI Emerging Markets                    1391.27    -1.05
 MSCI LatAm                               2356.51    -2.62
 Brazil Bovespa                         116922.08    -1.19
 Mexico IPC                              44595.41    -0.48
 Chile IPSA                               4481.03    -2.15
 Argentina MerVal                        48662.41    0.392
 Colombia COLCAP                          1418.46    -1.92
                                                          
              Currencies                  Latest   Daily %
                                                   change
 Brazil real                               5.4722    -2.01
 Mexico peso                              19.9290    -1.08
 Chile peso                                   728    -1.36
 Colombia peso                            3526.52    -1.33
 Peru sol                                   3.634    -0.31
 Argentina peso (interbank)               86.5600    -0.15
                                                   
 Argentina peso (parallel)                    153     1.96
                                                   
 
 

 (Reporting by Shreyashi Sanyal in Bengaluru, Editing by Angus
MacSwan)
  
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